Will Whistleblowing Make Ukraine a Better Place for Doing Business?

It was not that long ago that I wrote a post about best practices on incentives for whistleblowers in different parts of the world. It was a great news to me to discover recently that well in advance of my post a group of lawyers, media specialists, civil society activists started to develop a legislative piece to promote whistleblowing in Ukraine.

The draft Law of Ukraine “On Protection of Whistleblowers and Disclosures in the Public Interest” has been developed and being promoted by the Initiative 11, which is a coalition of civil society organizations for whistleblower protection in Ukraine.

Furthermore, we are excited to inform you that the partner of Compliance Periscope, the Ukrainian League of Lawyers for Corruption Combating, as a member of the mentioned coalition, has recently published an English version of the draft. You can check out the draft law “On Protection of Whistleblowers and Disclosures in the Public Interest” in English with this link. The draft law has passed few committees of Verkhovna Rada and awaits the first hearing under the No. 4038а. You can follow its progress here.

The draft law covers a lot of important topics like internal reporting systems, external reporting, reporting channels, measures of whistleblowers protection like exemption of criminal liability and protection against employer retaliation, anonymity, and last but not least financial incentives to whistleblowers in the amount of 10% of seized money. According to the draft law whistleblower reporting concerns not only public companies, but also some companies having monopolies in their areas, banks, investment and insurance companies, large companies with 50 and more employees, or those participating in public procurement.

US has launched an extended whistleblowers protection and reward program as part of Wall Street reform in 2010 with the Dodd-Frank Act (see SEC report on the Dodd-Frank Whistleblower Program). As a result, the number of whistleblowing reports has increased significantly. Companies reacted in different ways. Some became more closed and limited the access to internal information for employees. Some updated their policies to minimize the opportunities for fraudulent activities. Still, studies show that most investigations in the US are based on the tips from whistleblowers (see 2016 ACFE Report to the Nations, page 21). I believe this is a good indicator of whistleblowing effectiveness in detecting and investigating corruption schemes and importance of adequate whistleblower protection laws.

To sum up, I believe that mentioned legislative initiative is vital in making the fight against corruption more efficient. It not only gives a new “stick” in the hands of society and enforcers, but also a huge “carrot” for people to change their role from silent spectators to active contributors in eliminating corruption in both private and public sectors.